Post on 24-Aug-2020
LAD: Lima 24-28 AUGUST 2015
1
Lima, 15 de julio 2015
Señor
Presente.-
Estimado (a)
Por la presente deseamos saludarlo e informarle que la Maestría en Gestión Pública de la
Universidad ESAN y el Leadership Academy of Development (LAD), organizarán el seminario
internacional “El Rol de la Política Pública en el Desarrollo del Sector Privado” que se realizará
del 24 al 28 de agosto de 08:30 a 17:30 horas en nuestro campus.
El seminario tiene como objetivo principal compartir con los participantes, experiencias
exitosas de gestión pública, en donde la política pública y el sector privado cooperan mutuamente
para generar bases para el crecimiento y desarrollo económico del país, a través del adecuado
diseño de políticas públicas, desarrollo de capacidades analíticas y de comprensión del sector
privado.
LAD es un programa de entrenamiento a nivel ejecutivo, ofrecido por el Centro para la
Democracia y Estado de derecho, que forma parte de la Universidad Stanford y del Centro para
negocios internacionales y política pública de la Escuela de estudios internacionales de la
Universidad John Hopkins. El programa está enfocado en la capacitación de futuros ejecutivos de
gobiernos y líderes empresariales de países en desarrollo. Por ello, las inscripciones para este
seminario se desarrollarán mediante una convocatoria cerrada y limitada exclusivamente por
invitación dirigida a un reducido número de ejecutivos de organizaciones públicas y privadas.
La metodología del seminario incluye clases magistrales, discusión y estudio de casos
emblemáticos a nivel global, conducidos por los reconocidos profesores Francis Fukuyama,PhD,
Ken Weaver, PhD y Molly Selvin,, PhD y distinguidos miembros de la facultad de ESAN, Rene
Cornejo, PhD(c) y Edwin Quintanilla, PhD.
La matrícula en el seminario es una oportunidad única para compartir con profesores de
primera línea y colegas temas de innovación en el sector público. El seminario tiene un costo de
US$400, e incluye materiales, traducción simultánea, almuerzos en campus y certificados. Para
confirmar su participación le agradeceré se comunique con Judith Honorio, a su correo
electrónico jhonorio@esan.edu.pe o a su teléfono 317 7200 anexo 4781.
Sin otro particular, esperando su participación, aprovecho la oportunidad para manifestarle
mi mayor consideración y estima personal.
Atentamente,
César Fuentes, Ph.D.
Director de la Maestría en Gestión Pública, Universidad ESAN
LAD: Lima 24-28 AUGUST 2015
2
The Role of Public Policy in Private Sector Development
Leadership Academy for Development & Universidad ESAN
24-28 August 2015
Course Overview
This is a four-and-a-half-day intensive program for a small number of mid- and high-level
government officials and business leaders, exploring how government can encourage and enable
the private sector to play a larger, more constructive role as a force for economic growth and
development. The process includes small team interactions, with case studies drawn from Asia and
Latin America. Major themes are 1) Industry promotion, 2) Policy implementation, and 3) Capital
market development. This program is designed to reinforce and illustrate three critically important
hypotheses about the role of public policy in private sector development:
1. Public policy matters! The performance of the private sector and its role as either a catalyst
or an obstacle to economic growth is closely connected to how well or badly government
policies are designed and implemented.
2. The public officials responsible for enhancing private sector participation must acquire a
range of analytical skills to be effective. But policy reform is not like engineering or other
technical fields where there is a clear optimal solution to a problem. Designing and
implementing meaningful policy reform requires a broader, more interdisciplinary
knowledge of economics, politics, local history and culture, combined with a sense of how
to set priorities, sequence actions and build coalitions.
3. Successful policy outcomes that encourage and strengthen private sector participation are
contingent upon the capacity of government officials and business leaders to understand
and appreciate the interests, motivations and objectives of their counterparts.
Course Sponsors
Leadership Academy for Development (LAD) LAD is an executive level training program offered by the Center for Democracy,
Development and the Rule of Law, part of Stanford University’s Freeman Spogli Institute
for International Studies, and the Center for International Business and Public Policy at the
School of Advanced International Studies, Johns Hopkins University. The LAD mission is
to provide future leaders working in the public and private sectors in developing countries
with relevant training about specific government policies designed to encourage the private
sector to play a more productive role in economic growth and development.
LAD: Lima 24-28 AUGUST 2015
3
Universidad ESAN
ESAN was the first academic Graduate School of Business Administration created in the
Spanish speaking world. It was founded on July 25th, 1963, under an agreement between
the governments of Peru and the United States of America. Its organization and
implementation was entrusted to the Graduate School of Business of Stanford University,
California. ESAN mission is to educate highly qualified upright leaders and professionals
with critical sense and global vision by strengthening their competencies, knowledge, and
values through research, teaching and knowledge dissemination activities.
The Case Method
The “case method” is a technique of teaching and learning through the analysis of actual events
that have occurred, allowing you to gain a realistic understanding of the roles, responsibilities and
analytical skills required of decision makers, as well as the tensions that may arise between various
stakeholders with different objectives. The cases in this course highlight both the political
challenges and analytical tasks encountered by government officials in different countries who are
responsible for formulating policies and programs designed to encourage a larger, more
constructive private sector role in the local economy, such as improving consumer credit
information in China, eliminating corruption in the Indonesian customs service by contracting out
critically important services to a private firm, or restructuring a public water and sewerage
authority in India. Each case is presented from the point of view of a practitioner—usually a
government official—who played a central role in the policy making process. As the reader of the
case, you are required to assume the role of the principal analyst/decision maker who must
thoroughly analyze the problem, identify and assess the issues, and make a defensible decision on
whether to proceed, and if so, how.
The case method is an active approach to learning. Rather than listening to lectures by professors
(i.e. passive learning), participants are expected to actively engage in a structured class discussion
of the case led by the professor. It cannot be stressed too strongly, therefore, that success with the
case method used in this course hinges on your willingness and ability to prepare meticulously in
advance of each class, and then participate actively in the class discussion. Because this is a
relatively realistic, “hands-on” method of learning, the case method approach should help you to
develop the skills needed to analyze some of the complex issues you encounter in your work. In
addition, it should strengthen your ability to make difficult decisions and communicate effectively.
Study Groups
You will be assigned to a study group consisting of about five members on the first morning of the
course. Time will be set aside during the course for groups to meet to discuss the case assignments
after you have completed a careful reading of the case. These group sessions provide an
opportunity to exchange views and discuss some issues likely to arise during class discussion.
Reaching a group consensus is not the objective. Ultimately, the goal of this process is to challenge
all participants to be more effective class participants, which heightens the quality of class
discussion for everyone.
LAD: Lima 24-28 AUGUST 2015
4
Final Study Team Assignment
Each study team will prepare a 15-minute presentation that will be given before the entire class on
the final day of the course. The presentation will outline a specific policy challenge regarding some
aspect of private sector development and propose a strategy to address this challenge, drawing on
lessons learned during the course.
This assignment is designed to encourage you and your study team colleagues to apply what you
have learned during the course to a real world problem that you might encounter in your country.
This assignment is a central component of the course, and therefore study teams are expected to
dedicate significant time during the week to this task, and produce a quality presentation that
demonstrates original thinking. On the afternoon of the first day, instructors will assist each group
to identify the policy challenge that they will address.
COURSE PROGRAM
8:30 – 9:00 Registration
9:00 – 9:20 Course Overview and Outline of Team Project: Prof. Francis Fukuyama
9:20 – 11:00 LECTURE: The State and the Private Sector by Prof. Francis
Fukuyama
11:00 – 11:15 Coffee Break
11:15 – 12:00 Study Teams prepare for Hyderabad water case
12:00 – 13:15 Group Photo and Lunch
CASE 1: The Hyderabad Metropolitan Water Supply and Sewerage Board (India): This case
discusses the efforts by the state of Andhra Pradesh and the Hyderabad Metropolitan Water Supply
and Sewerage Board to provide water services to its poorest inhabitants - approximately 1.7 million
people. The state government must reconcile the demands of politicians and private investors as
well as the underserved inhabitants. Undermining this challenge is the reality that Hyderabad is
located in a comparatively dry region of India, and the Water Board is only able to provide water
for an average of two hours per day. In order to attract much needed investment and upgrade the
service, the local government decides to privatize the Board. The case will enable the class to
explore the economic, operating and behavioral issues associated with this type of decision.
DAY 1: MONDAY 24 AUG
LAD: Lima 24-28 AUGUST 2015
5
Study Questions
1. What are the goals of the HMWSSB? How should it prioritize among
its various goals? (Which goals should it prioritize, and on what
basis?)
2. To whom does Mr. Gopal answer? Whose interests does he have to be
concerned with? Why? What resources does he have, and what
constraints does he face, for managing this external environment?
3. What are the constraints on privatization facing the HMWSSB? How
attractive would it be to international water companies?
4. Analyze the cost structure and user charges, using the data provided at
the end of the case. Note in particular the gap between income and
expenditure in Table 1. What are the implications of these figures for
the ability of the HMWSSB to finance service improvements?
5. What strategies should HMWSSB pursue to achieve its priority goals?
The case identifies three options related to the question of
privatization. But there may be other alternative or additional
strategies or actions to take. (For example, you might consider
increases in user charges, improving collection efforts, adjusting the
labor force size, etc.) What are the advantages and disadvantages of
each strategy? Make sure to consider constraints that may limit
feasibility.
6. Consider the policy options outlined in Question 5. How you would
react to these options if you were:
Unions representing workers at the Hyderabad Metropolitan
Water Supply and Sewerage Board and the Municipal Corporation
of Hyderabad
The World Bank
An international water firm interested in entering the Indian
market
A civil society organization that represents slum-dwellers who do
not have water and sewerage connections
The Municipal Corporation of Hyderabad
Reading: Jennifer Davis & Sunil Tankha. “The Hyderabad Metropolitan
Water Supply and Sewerage Board.” HKS Case #319.
13:15 – 14:45 CASE 1: The Hyderabad Metropolitan Water and Sewerage Board
(India) -- Prof. Kent Weaver
14:45 – 15:00 Coffee Break
LAD: Lima 24-28 AUGUST 2015
6
15:00 – 16:30 LECTURE: Energy Reform Design, and Future Challenges by Prof.
Edwin Quintanilla
Study Questions:
1. • Which factors were instrumental in implementing the initial regulatory
design?
2. Which are the autonomy attributes of the Peruvian regulator and how they
have been maintained over time?
3. Which is the management model employed to ensure efficient and
effective regulation and monitoring?
4. What are the future challenges of the Energy Regulator in order be
autonomous and promote investment vis-a-vis consumers rights
protection?
16:30 – 17:30 Study Teams Work on Final Presentation
17:30 – 20:00 Evening wine and cheese reception
9:00 – 10:15 LECTURE: Implementing Public Policy by Prof. Kent Weaver.
10:15– 10:30 Coffee Break
10:30– 11:00 Study teams prepare for the Costa Rica case
11:00 – 12:15 CASE 2: Facilitating Trade through Effective Border Control – LAD
Assistant Director Molly Selvin
DAY 2: TUESDAY 25 AUG
Peru Energy Sector nearly collapsed in the late 80s. Two factors were key to reverse that
situation in the early 90s: The institutions reform, developing a predicable regulatory
framework vis-a-vis promoting new investments, and the second was developing a high
quality management team. Peru regulatory framework is now a model in Latin America.
LAD: Lima 24-28 AUGUST 2015
7
Study Questions:
1. What factors would you emphasize to make a convincing case that the
economic benefits derived from strengthening border management far
outweigh the costs, regardless of the country?
2. If there was a “broad consensus” in Costa Rica that addressing the
inefficiencies at the Peñas Blancas border-post should be a high
government priority, why had the problems persisted for so long
without resolution? In your view, are the issues primarily
financial/technical or political?
3. Why had it been so difficult to reach agreement on cost-saving reforms
at the border post that clearly would be financially beneficial to both
private and government stakeholders (see Box 2)?
4. Which government and/or private sector stakeholders stand to lose
from enhancing the efficiency of the border crossing process? What
can Ocampo propose to mitigate at least some of their opposition?
5. Do you believe that the work of the outside experts added value, and
facilitated Ocampo’s decision making on an effective package of
reforms?
6. If you were in Ocampo’s shoes, which 3 World Bank proposed
changes would you endorse, and why? Which 3 would you oppose?
(see p. 9)
CASE 2: Facilitating Trade through Effective Border Control: Costa Rica: Peñas Blancas,
the border post where all overland commerce passed between Costa Rica and Central American
countries to the north, was infamously slow and exceedingly congested. Trucks sometimes
waited five days or more to pass through the customs post. The inefficiencies also had a real
economic cost, as the border crossing was a major contributor to Costa Rica’s nation budget
through customs-related taxes and duties. Fixing Peñas Blancas had become a major national
priority, and the Deputy Minister of Commerce was put in charge of recommending solutions
to the congestion problem and improving the collection of taxes and fees. The task was
especially complex because of political sensitivities, and the need to reconcile the competing
interests of numerous stakeholders. Any solution would have to take into consideration the ways
in which government officials, as well as private-sector actors—from exporters to customs
brokers to banks—interacted and conducted business at the border-crossing.
LAD: Lima 24-28 AUGUST 2015
8
7. Prioritize and provide a justification for the 4 or 5 key
recommendations Ocampo should make to President Chinchilla.
Reading: Ronald Arce and Julia Oliver, “Facilitating Trade through
Effective Border Control: Costa Rica’s Challenging Reform Agenda,”
Case Study, Leadership Academy for Development.
12:15 – 13:15 LUNCH
13:15 – 14:30 Promoting Behavior Change Among Businesses and Individuals by
Prof. Kent Weaver.
14:30 – 14:45 Coffee Break
14:45 – 15:15 Study Teams prepare for the Medellin Case
CASE 3: Diminishing the size of the informal sector in Medellin (Colombia): The new mayor
of Medellin, Sergio Fajardo, arrived to office in 2004 pledging to remake the social contract
between society and the state. He campaigned to introduce innovative social programs designed
to lessen the high levels of poverty and violence in the city. But the mayor needed money to finance
these programs. The Minister of Planning, Federico Restrepo Posada, was charged with engaging
the private sector, increasing tax revenue and promoting job creation. To do this, Restrepo needed
to address the high levels of informal economic activity hindering economic dynamism and
depressing the tax base. The state could not provide the necessary services because it did not collect
enough taxes, but businesses refused to pay taxes because they did not believe the state capable of
delivering the services that they required. The case looks at how Restrepo addressed this dilemma.
Study Questions:
1. From the perspective of a person starting or operating a business, list
the benefits and costs associated with operating in an informal context
and in a formal context.
2. What are the causes of having a large informal economy? What are
the consequences (positive and negative) for a country or a city of
having a large informal economy?
3. Why does Restrepo want to decrease informality in Medellin?
4. What are the major challenges in getting Medellin businesses to
formalize? How does Restrepo go about thinking about this problem?
5. What constraints does Restrepo face in reducing the informal sector?
What tools does he have at his disposal?
LAD: Lima 24-28 AUGUST 2015
9
6. There are several policy options implicit in the text. These include:
a. Increase penalties for informal businesses
b. Create business service centers in marginalized areas that serve as a
once stop shop
c. Work to increase the access to markets for small businesses via
trade fairs and other government assistance programs
d. Reduce the number of procedures for opening a business or locate
all of the registration process in one central location
e. Provide a tax holiday for registering businesses
Identify the advantages and disadvantage of each option. Which
stakeholders would you have to collaborate with in order to execute
each option? Which policy option would you choose?
7. Consider the policy options outlined in Question 7. How you would
react to these options if you were:
a small bakery with one outlet and five employees
a small manufacturer of apparel with ten employees
a small construction company that employs ten employees on an
irregular basis, depending on demand for services
Front-line workers in tax and labor inspectorates
Local drug gangs
Reading: Seth Colby, “Serious Business: Diminishing the Size of the
Informal Sector in Medellin, Colombia,” Case Study, Leadership
Academy for Development.
15:15 – 16:30 CASE 3: Diminishing the Size of the Informal Sector in Medellin –
Prof. Kent Weaver
16:30 – 18:00 Study Teams Work on Final Presentation
9:00 – 10:15 LECTURE: Economic Growth, Poverty Alleviation and Financial
Sector Development by Prof. Francis Fukuyama.
10:15 – 10:30 Coffee Break
10:30 – 11:00 Study teams prepare for the Brazil Stock Market Case
11:00-12:15 CASE 4: Brazil stock market – Prof. Francis Fukuyama
DAY 3: WEDNESDAY 26 AUG
LAD: Lima 24-28 AUGUST 2015
10
CASE 4: Increasing Financing Opportunities for Local Companies by Reforming the
Domestic Stock Market (Brazil): This case focuses on the importance of creating a local stock
market that serves as an attractive source of financing for growth-oriented small and medium size
enterprises (SMEs) as well as established large companies. Brazilian officials recognized that in
order for the private sector to become a larger, more constructive contributor to the country’s
economic growth and development there must be major reforms in the regulations and
infrastructure of the stock exchange. The case examines the constraints to stock market
development and various policy and regulatory options considered by Brazilian officials as they
worked to strengthen the domestic stock market and expand private company access to equity
capital.
Study Questions:
1. What specific factors would you cite to support the proposition that a
well-functioning stock exchange is vitally important to economic
development in Latin America, and therefore should be a high priority
for the government?
2. Are there similarities between the Brazilian and Peruvian situations that
demonstrate the challenges of creating a stock exchange that will
provide access to capital for growth-oriented companies?
3. How do you define “corporate governance”? Why are internationally
acceptable corporate governance standards a fundamental prerequisite
for companies, regardless of the country in which they operate, to issue
public securities successfully? Why do many company owners resist
adopting acceptable corporate governance practices?
4. The Brazil case identifies a diverse range of stakeholders in both
government and the private sector who will be affected by stock market
reforms—some will benefit, but others may not. What are the
similarities and differences between these Brazilian stakeholders and
those in Peru today?
5. Based on what is described in the Brazil case, would you be in favor a
creating a stock exchange in Peru that is geared specifically to
addressing the financing needs of SMEs?
6. Which option should Maria Helena Santana and Gilberto Mifano
recommend for implementation? What arguments would you emphasize
to gain support for your recommendation with the major stakeholders?
What are the risks that must be addressed and how can they be
mitigated?
7. What are the broader lessons learned from Brazil’s experience that are
relevant to Peru today?
LAD: Lima 24-28 AUGUST 2015
11
Reading: Aaron Mihaly, “Access to Financial Resources for Local
Companies: Revitalizing Brazil’s Stock Exchange,” Case Study,
Leadership Academy for Development.
12:15 – 13:15 Lunch
13:15 – 13:45 Study Teams prepare for the Brazil stock market case
13:45 – 15:00 CASE 5: Chinese Consumer Credit – Prof. Frank Fukuyama
CASE 5: Creating a Consumer Credit Information System (China): This case examines (i)
why governments must play a leadership role to ensure the creation of a credit information system
(CIS) that is designed to encourage banks and other domestic financial institutions to increase their
lending to local consumers; (ii) alternative strategies/models for implementing a new CIS that have
been used by different countries; and (iii) the complex issues encountered by the government
officials who are responsible for assessing the strengths and weaknesses of the alternative
approaches to creating a new credit information system. The case focuses particular attention on
the critical role of officials in the central bank of China’s (PBOC) who were in charge, and their
interactions with their technical advisors from the International Finance Corporation (World Bank
affiliate) who were recommending a CIS model that differed from what the Central Bank believed
was appropriate for conditions in China.
Study Questions
1. What is the main explanation for why fewer than 25% of households
in many developing countries deposit their savings in a bank?
2. What specific reasons explain why banks and other financial
institutions resist lending to consumers and SMEs in many developing
countries, including Peru?
3. How does a well-functioning credit registry system (CRS) mitigate the
risks and strengthen the incentives for banks to increase lending to
ordinary citizens and SMEs? (For background please read Chapters 1
& 2 of IFC’s “Credit Bureau Knowledge Guide” in the reading
packet.)
4. As the case explains, China had no previous experience with a CRS
and created a system from scratch. What are the similarities and
differences between China’s experience creating a CRS under the
direction of Mr. Dai and the circumstances in Peru today?
5. Did Mr. Dai and his Chinese colleagues encounter specific political
and policy challenges that are similar to what Peru would likely
LAD: Lima 24-28 AUGUST 2015
12
experience in creating a CRS? For example, are the stakeholders who
have a vested interest in the final CRS structure similar?
6. Why did the International Finance Corporation (IFC) advocate a private
rather than a public model for the Chinese CRS, and why did Mr. Dai
decide not to take the IFC advice? Based on your perception of the
realities in China, which model would be most appropriate, and why?
Reading: Sai Ma and Justina Wong, “Establishing the Individual Credit
Registry System in China,” Case Study, Leadership Academy for
Development.
15:00 – 15:15 Coffee Break
15:15 – 16:45 Lecture: Mivivienda Fund: Access to housing using market mechanisms
lecture by Prof. Cornejo.
State intervention in the housing market is universal. The Peruvian
experience is a joint effort between public and private actors to align
incentives and enable a range of options for families to have affordable
homes.
16:45 – 18:00 Study Teams prepare for final presentation
9:00 – 9:30 Study Teams prepare for Peru decentralization case
9:30 – 10:45 CASE 6: Peru Decentralization – Prof. Frank Fukuyama
DAY 4: THURSDAY 27 AUG
CASE 6: Administrative Decentralization in Peru (Peru): Alejandro Toledo’s election as
Peru’s first indigenous president, in 2001, symbolized increased political participation to
people who were also “from the provinces” or the rural countryside. Immediately following
his election, Toledo’s administration passed a constitutional reform that gave sub-state
authorities more power in public decision-making. Regional elections were scheduled
for November 2002, and the newly elected Regional Presidents (Presidentes Regionales) and
Regional Councils (Consejos Regionales) assumed office on January 1, 2003. This
case explores the challenges of implementing administrative decentralization, centered on a
decision made by Nelson Shack, Peruvian national director of the public budget. It encourages
students to consider the difficulties of using decentralization as a mechanism for encouraging
sub-state economic growth and the technical, human capital, and budgetary constraints of
decentralizing a public budget.
LAD: Lima 24-28 AUGUST 2015
13
Study Questions:
1. Can decentralization work to stimulate sub-state economic growth? Are
there other actors that local officials should involve in the process?
2. Are there ways to streamline the MEF’s methodology application and
selection process for investment projects? If yes, how?
3. What should the consequences be if a region or leader misappropriates
the funds devolved to that region?
4. How can Shack find the optimal trade-off between writing regions a
“blank check” and not giving them enough autonomy?
5. What political consequences do you foresee from the proposed
redistribution transfers, according to the ENAHO poverty index?
Which regions might be more in favor of this redistribution scheme
than others?
6. Is Peru approaching this process the wrong way; should administrative
decentralization accompany political decentralization, or come at a later
date?
Reading: Jessie Bullock, “Administrative Decentralization in Peru,” Case
Study, Leadership Academy for Development.
10:45 – 11:00 Coffee Break
11:00 – 11:30 Study teams prepare for the Brazil Deforestation case
11:30 – 12:45 CASE 7: Brazil Deforestation – Prof. Kent Weaver
CASE 7: Defending the Environment at the Local Level: Dom Eliseu, Brazil, 2008-2014. A
former center of the timber industry in the Brazilian Amazon, the municipality of Dom Eliseu
had built its economy around deforestation—much of it illegal. In 2008, as part of a strategy to
enforce the country’s environmental policies, the federal Ministry of the Environment included
Dom Eliseu on a list of the worst violators of deforestation laws. The blacklist cut off residents’
access to markets and credit and made the municipality the target of intensive law enforcement.
To get off the blacklist, the community had to overcome a collective-action problem. The local
government had to persuade the owners of 80% of private land—more than 1,000 properties—
to map their property boundaries, declare the extent of deforestation, enter their properties in the
state environmental registration system, and adopt more-sustainable methods of production. The
municipality also had to build the capacity to take on new responsibilities for environmental
protection—most important, environmental licensing, which would enable the local government
to regulate land use.
LAD: Lima 24-28 AUGUST 2015
14
Study Questions:
1. List the different actors/stakeholders in the case. What are the
interests or concerns of each with regard to the policies being
implemented in Dom Eliseu? Are interests shared or divergent? Are
relationships between different actors cooperative or conflictual?
2. Was the municipal government well placed to take on the challenges
of removing Dom Eliseu from the blacklist and taking on the
deforestation problem? What made it difficult? What did Neto and
Poggi need to do to be successful?
Reading: Maya Gainer, “Defending the Environment at the Local Level:
Dom Eliseu, Brazil, 2008-2014,” Case Study, Leadership Academy for
Development.
12:45 – 13:45 Lunch
13:45—14:15 Study teams prepare for the Outsourcing Customs Inspection Case
CASE 8: Outsourcing customs inspections (Indonesia): This case describes the Indonesian
government’s decision to combat systemic corruption and enhance efficiency in the customs
service by “outsourcing” the customs inspections function to a foreign private company
Although the program was a success from an efficiency point of view—the cost of importing
goods fell and customs revenues increased significantly—the decision was highly controversial
and eventually there was strong pressure to reverse the decision and return customs inspection to
the national customs service. The case highlights how the government struggled to reconcile the
interests of diverse stakeholders in government and the private sector. Nationalist constituencies
in the country advocated returning customs inspection to the government, arguing that it was an
issue of national sovereignty, but importers and other business groups wanted to continue with
the outsourcing approach because of its success in reducing corruption and lowering transaction
costs. The objective of this case is to evaluate the pros and cons of the two alternative
approaches, taking into consideration the interests of powerful and important stakeholder groups.
14:15—15:30 CASE 8 DISCUSSION – Kent Weaver
15:30 – 15:45 Coffee Break
15:45 – 16:00 Study Teams prepare for final presentation
9:00 – 10:15 Group Presentations, Round 1
DAY 5: FRIDAY 28 AUG
LAD: Lima 24-28 AUGUST 2015
15
10:15 – 10:15 Coffee Break
10:15 – 11:30 Group Presentations, Round 2
11:30 - 12:00 Graduation
12.00 – 13:00 Cocktail Reception